Singapore courts friends, wins enemies

Singapore's business-minded leaders say they want to be friends with everybody. That makes sense for a tiny island state of 4 million people trying to make a living in a volatile region increasingly dominated by China and India.

But as protests in Thailand against the prime minister, Thaksin Shinawatra, have intensified, Singapore has found itself on the receiving end of a highly unamicable barrage of insults and threats from its large neighbour to the north.

Posters of Singapore's prime minister, Lee Hsien Loong, have been burned in public; the Singaporean embassy in Bangkok has been besieged; and a boycott of the country's products has been urged. Protesters brandish placards saying: "Thailand not for sale" and "Singapore get lost".

Sondhi Limthongkul, a leader of the Thai opposition People's Alliance for Democracy, accused Singapore of "economic imperialism", and warned of serious consequences this week. "If you don't stop, should the Thaksin government change - and he will go down soon - we will make sure that your activities in Thailand go down with him," he said.

Thai anger centres on January's tax-free $1.9bn (£1bn) sale of Shin Corp, a telecoms conglomerate founded by Mr Thaksin and owned by his family, to Temasek Holdings, the Singapore government's state investment arm.

The opposition portrays the deal as a threat to Thai sovereignty and control of key national assets such as satellites. It wants the sale rescinded and allegations of insider dealing investigated as part of its wider campaign to strengthen democracy and public accountability.

But Singaporean officials say the Shin Corp row has nothing to do with them. "Temasek operates like any other company," said Angelina Fernandez of the Monetary Authority of Singapore, the country's central bank. "Even though it is government owned, it is not government directed. The ministry of finance does not tell Temasek what to do."

Lim Hng Kiang, Singapore's minister for trade and industry, said the sale had become enmeshed in domestic Thai politics but admitted the government had been caught on the hop. "Obviously we were surprised," he said. "We didn't expect it would provoke such a reaction." Mr Lim said the opposition's boycott had "not gained traction" and predicted bilateral relations would suffer no lasting harm.

Singapore's hard-nosed brand of free-wheeling, free-market capitalism, and what critics see as a concomitant lack of concern for democratic rights and civil liberties, has caused controversy before. Campaigners say significant Singaporean investment in Burma, which is run by a military junta, undermines UN-led efforts to encourage reform.

And Singapore's enthusiastic pursuit of regional free trade agreements is not wholly shared by some fellow members of the Association of South-East Asian Nations (Asean) concerned at the social and cultural impact of too-rapid economic change. Mr Lim would like to see Asean function as a European-style common market of 500 million people. "Others don't share Singapore's sense of urgency," he said.

Majority-Chinese Singapore's be-friends-with-everybody policy is further complicated by history. The prime minister urged expanded trade with China during a recent visit to Beijing. But the former British colony remains an important western ally that affords naval facilities to the US Pacific fleet, keeps on good terms with Japan, and harbours secret sympathies for Taiwan. As Sino-American strategic competition in Asia hots up, it may eventually be forced to take sides.

Singapore's precociousness has also fuelled regional jealousies, illustrated by a bizarre row with Malaysia (from which it broke away in 1965). Malaysia wants to replace the causeway linking the countries with a bridge. Singapore has not agreed so far. It cites the high costs - but deeper concerns about its "over-bearing" neighbour are also in play.

Impatient at the delay, Malaysia has now decided to build its half of the bridge anyway, regardless of whether it actually leads anywhere. "Singapore is the most insolent neighbour in the world," one Malaysian MP said this week - showing once again that friendly bridge-building is uphill work.